Financial Crisis Fallout: How Much Longer?

In a recent global survey, CFA Institute members were asked to reflect on the following statement:

The current global credit crisis has severely impacted market trust and confidence. Approximately how long do you believe the impact of the credit crisis will last?

Tellingly, about half of global CFA Institute members surveyed (49 percent) think the credit crisis will impact market trust for five years or less, while approximately one-third (32 percent) anticipate a more enduring impact of longer than 5 years. (That’s not five years from now, but rather five years from about September 2008, when the financial crisis escalated with the collapse of Lehman Brothers, the AIG bailout, and the sale of Merrill Lynch).

Read the full survey results (PDF).

CFA Institute members in South Africa, the United Kingdom, Japan, and the United States were the most pessimistic in their assessment that the credit crisis will last more than five years. Meanwhile, India, China, Singapore, and perhaps surprisingly, France had the highest proportion of members who believe the impact will last only one to two years.

With few exceptions, those in better established markets were more pessimistic than those in the developing world. This should come as no surprise, of course, as fast-growing emerging markets are well placed to emerge from the crisis at a faster pace than the developed world.

Perhaps most interesting is that there seems to be consensus in each market surveyed that the effects of the crisis will last between three to five years (this option was most frequently chosen in each country surveyed).

So, according to our members, we should either get beyond the immediate effects of the global crisis this year (2011), when trust in the markets and market professionals will return to “normal,” or we may have up to two more years of fits and starts until we see restored trust in the integrity of the capital markets.

What do you think?